This Pharma Stock May Rally Up To 51%, Says Nirmal Bang — Key Triggers, Target Price Inside

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Nirmal Bang Report

Zota Healthcare Ltd. remains well positioned to benefit from the structural shift toward generic medicines in India, supported by its scalable Dava India pharmacy network, and strong private label model. Growth is expected to be driven by store expansion, improving store productivity, and an increasing chronic patient base.

While the company remains in an investment phase with near-term profitability impacted by aggressive store additions, operating leverage is expected to improve meaningfully as stores mature, leading to a sharp recovery in margins and earnings from FY27.

The brokerage's operational estimates remain unchanged with revenues expected to scale significantly over the medium term as the store network expands and the contribution from mature stores increases.

Valuation:

Nirmal Bang expects revenues to clock a CAGR of 77% over FY25–FY28E, driven by aggressive store additions and continued scale-up of the Dava India network.

The brokerage expects the company to generate positive Ebitda by FY27E (to Rs 534 million) and turn PAT-positive by FY28E with PAT estimated at Rs 551 million. Currently, the stock trades at P/S of 6.5x/3.3x/2.3x over FY26E/FY27E/FY28E, respectively.

While the brokerage maintains its earnings estimates, it has moderated the valuation multiple to adapt to evolving sector dynamics.

Return ratios are expected to improve gradually with RoCE/RoE estimated at 9.1%/9.7% by FY28E. The brokerages models the company on a FY30E basis and discount it back to present value, arriving at a target price of Rs 1,668.

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